Security Bank eyes P2.5 billion from stock rights issue

MANILA, Philippines - Security Bank Corp. expects to raise P2.5 billion from a stock rights offer “to support strategic growth initiatives, which include expanding client relationships and acquiring new clients,” the bank said in a statement.

The pre-emptive rights offer will involve 89.28 million new ordinary shares priced at P28 each. The price of the rights offer was a 50-percent discount to the 15-day volume-weighted average price at the Philippine Stock Exchange covering the period Oct. 6 to 26.

Shareholders will be entitled to one rights share for every 3.7 shares held as of Nov. 5. The offering has been scheduled from Nov. 5-11, 2009.

SB Capital Investment Corp. is the underwriter for the domestic offer while JP Morgan (S.E.A) Ltd. will handle the international offer.

“The rights issue will increase the bank’s Tier 1 and capital adequacy ratio from 11.6 percent and 14.5 percent (as of June 30,2009) to 13.6 percent to 16.5 percent, respectively. The bank believes that a stronger capital position not only enhances its flexibility in case of an unexpected delay in economic recovery but also strengthens the bank’s businesses through deepening relationships with existing clients and to accelerate organic growth,” the bank said.

Security bank said its major shareholders, including the Dy Group which controls 41.5 percent of the bank’s share capital, have expressed intention to subscribe to their pro-rata allotment.

The bank is expecting a total branch network of 129 by yearend.  

“Our deposits per branch are now higher than industry average, meaning we are approaching a saturation point per branch area and that if we want to continue to grow, we had to grow the distribution,” Security Bank president and CEO Alberto Villarosa said.

He said the bank has sufficient funds if the opportunity for acquisition arises. “Our strategy has been customer acquisition, which doesn’t necessarily mean acquiring customers one-by-one. It also means acquiring customers by bulk. If the customers can not be detached from an institution, we do not mind getting the institution as well,” Villarosa explained.

In the first half this year, Security Bank’s net income grew 89 percent to P1.41 billion after net interest surged almost a quarter to P2.9 billion. The company said its loan portfolio went up almost 21 percent to P66.4 billion, while deposits expanded 27.6 percent to P105 billion during the period.